Conventional Mortgage Loan Program
Borrowers in the United States that obtain loans might be familiar with the Conventional Mortgage Loan Program. Conventional is a very popular type of mortgage financing due to their accessibility.
In general, about 60% of U.S. homebuyers use a conventional loan when purchasing or refinancing a home. According to the National Association of Realtors, 88% of home buyers financed their home purchase in 2019.
So, what does having a conforming conventional mortgage really mean?
In short, a conforming conventional mortgage refers to a loan that is within the conforming limit dollar cap, based on the corresponding residential property type (i.e. 1-4-unit dwellings), and is eligible for sale to Fannie Mae or Freddie Mac.
Conforming limits can be adjusted on an annual basis, usually from October of the current year to October for the next year. The national conforming limit for a 1-unit dwelling in 2020 generally changes every year.
MortgageQuote.com specializes in helping borrowers obtain conforming conventional mortgage financing.
Here is a brief overview of where conforming conventional mortgages came from, as well as some things you might want to consider before choosing a conventional loan for your next purchase or refinance.
Conforming Conventional Mortgage Loan Program Limits
Conforming limits have been around for some time. Since the enactment of the Housing and Economic Recovery Act of 2008, the Federal Housing and Finance Agency (FHFA) has been in charge of monitoring and adjusting the national conforming criteria.
Between the period of 2006-2016, the conforming limits set by the FHFA never really changed. However, since 2016 the limit has increased by roughly $93,400.
The limits are weighted heavily on median home values across the nation. These values, in general, increased in 2019, especially in high-cost areas. This has driven up the maximum amount while simultaneously increasing the baseline, resulting in new ceilings.
Conforming Conventional Mortgage Loan Program
There are a lot of conforming conventional options available to borrowers looking to purchase a new home or refinance an existing mortgage.
You can choose from a variety of fixed rate or adjustable rate options. Borrowers also have the flexibility to choose a term that aligns with their overarching financing goals. If you are looking to pay off your debt faster, you may want to consider a lower term.
Keep in mind, in general, with a longer term you have more time to repay your loan, meaning your payments may be lower compared to a shorter repayment term.
Mortgage insurance may also be required for certain transactions, but is cancellable once there is enough equity generated within the home.
If costs are also a concern, you may have the option to roll some of those into the debt itself, minimizing your out of pocket expense.
Want to learn more about conforming conventional programs? MortgageQuote can answer all your conforming conventional mortgage program related questions. We help clients obtain mortgages for conventional loans throughout Florida.
If you are interested in knowing what the difference and similarities between conforming and conventional mortgages are then review our article on Conforming vs Conventional.